Venezuela’s state-held oil company PDVSA – which has been barely avoiding default recently – is months behind on shipping crude oil and fuel to China and Russia under oil-for-loan agreements with its key political allies, Reuters reported on Thursday, citing internal PDVSA documents it had reviewed.

The shipments that PDVSA has failed to deliver to Chinese and Russian state-held companies are worth around US$750 million, a Reuters analysis has shown.

Russia and China have extended at least US$55 billion in credit to Venezuela, whose only foreign-exchange cash cow is PDVSA.

But the oil company’s finances and Venezuela’s economy are so strained that now it seems that PDVSA is not honoring even the deals with China and Russia that are crucial for the Venezuelan company because those two countries buy one-third of its oil and fuel exports.

Venezuela’s socialist government has been using loans from China and Russia to finance social investments and infrastructure. But now the situation is so dire, and economy is collapsing with inflation and currency devaluation reminiscent of Weimar Germany.

But it’s not only government deals that PDVSA has not been honoring. According to documents seen by Reuters, between October and January, the Venezuelan company canceled or delayed shipments to commercial buyers – including regular customers like U.S. Phillips 66 and Thai TIPCO Asphalt - of nearly 7 million barrels of crude oil, due to rescheduled or skipped cargoes, often because it did not have enough oil available.

Last month it emerged that more than 4 million barrels of Venezuelan crude oil and fuels were stuck in tankers in the Caribbean because PDVSA could not afford to pay for cleaning dirty tankers and port inspections.

Credit rating agency Fitch said last week that PDVSA’s default is probable, and it seems now that it is only a matter of time.

Leave a comment

That email address is already in the database. Please login to your account to post your comment, or enter a different email address to continue with your comment & account creation.

Captcha

Comment

Please understand that, by submitting this form, you will be creating a free OilPrice.com account, and therefore agree to abide by our Terms of Use. Your details will be stored in our database and shared with our third party mailing list provider. You will be sent an email containing a link that will ask you to generate a new password - please follow the link to complete your OilPrice account activation.

We will save the information entered above in our website. Your comment will then await moderation from one of our team. If approved, your data will then be publically viewable on this article. Please confirm you understand and are happy with this and our privacy policy by ticking this box. You can withdraw your consent, or ask us to give you a copy of the information we have stored, at any time by contacting us.